Question
In: Accounting
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all of the common stock of...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all of the common stock of Carla Vista Corporation, which became a division of Sunland. Carla Vista reported the following balance sheet at the time of the acquisition:
| Current assets | $ 972,000 | Current liabilities | $ 648,000 | |||
| Noncurrent assets | 2,916,000 | Long-term liabilities | 540,000 | |||
| Stockholder's equity | 2,700,000 | |||||
| Total assets | $3,888,000 | Total liabilities and stockholder's equity |
$3,888,000 |
It was determined at the date of the purchase that the fair value
of the identifiable net assets of Carla Vista was $3,348,000. At
December 31, 2021, Carla Vista reports the following balance sheet
information:
| Current assets | $ 864,000 | |||
| Noncurrent assets (including goodwill recognized in purchase) | 2,592,000 | |||
| Current liabilities | (756,000 | ) | ||
| Long-term liabilities | (540,000 | ) | ||
| Net assets | $2,160,000 |
It is determined that the fair value of the Carla Vista division is
$2,376,000.
Part 1
Correct answer iconYour answer is correct.
Compute the amount of goodwill recognized, if any, on May 31, 2021.
| Amount of goodwill | $ |
Part 2
Determine the impairment loss, if any, to be recorded on December 31, 2021.
| Impairment loss | $ |
Part 3
Partially correct answer iconYour answer is partially correct.
Assume that the fair value of the Carla Vista division is $2,106,000 instead of $2,376,000. Prepare the journal entry to record the impairment loss, if any, on December 31, 2021. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
Solutions
ekkarill92 answered 3 years agoRelated Solutions
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all of the common stock of...
On May 31, 2021, Sunland Company paid $3,780,000 to acquire all
of the common stock of Carla Vista Corporation, which became a
division of Sunland. Carla Vista reported the following balance
sheet at the time of the acquisition:
Current assets
$ 972,000
Current liabilities
$ 648,000
Noncurrent assets
2,916,000
Long-term liabilities
540,000
Stockholder's equity
2,700,000
Total assets
$3,888,000
Total liabilities and
stockholder's equity
$3,888,000
It was determined at the date of the purchase that the fair value
of the identifiable net assets...
Problem 12-04 On July 31, 2020, Sunland Company paid $2,800,000 to acquire all of the common...
Problem 12-04
On July 31, 2020, Sunland Company paid $2,800,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Sunland. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$720,000
Current liabilities
$510,000
Noncurrent assets
2,500,000
Long-term liabilities
410,000
Total assets
$3,220,000
Stockholders’ equity
2,300,000
Total liabilities and stockholders’ equity
$3,220,000
It was determined at the date of the purchase that the fair value
of the...
On July 31, 2020, Ivanhoe Company paid $2,750,000 to acquire all of the common stock of...
On July 31, 2020, Ivanhoe Company paid $2,750,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Ivanhoe. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$830,000
Current liabilities
$550,000
Noncurrent assets
2,450,000
Long-term liabilities
450,000
Total assets
$3,280,000
Stockholders’ equity
2,280,000
Total liabilities and stockholders’ equity
$3,280,000
It was determined at the date of the purchase that the fair value
of the identifiable net...
On July 31, 2020, Oriole Company paid $2,750,000 to acquire all of the common stock of...
On July 31, 2020, Oriole Company paid $2,750,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Oriole. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$730,000
Current liabilities
$560,000
Noncurrent assets
2,450,000
Long-term liabilities
460,000
Total assets
$3,180,000
Stockholders’ equity
2,160,000
Total liabilities
and stockholders’ equity
$3,180,000
It was determined at the date of the purchase that the fair value
of the identifiable net...
On July 31, 2020, Crane Company paid $2,950,000 to acquire all of the common stock of...
On July 31, 2020, Crane Company paid $2,950,000 to acquire all
of the common stock of Conchita Incorporated, which became a
division (a reporting unit) of Crane. Conchita reported the
following balance sheet at the time of the acquisition.
Current assets
$720,000
Current liabilities
$520,000
Noncurrent assets
2,650,000
Long-term liabilities
420,000
Total assets
$3,370,000
Stockholders’ equity
2,430,000
Total liabilities and stockholders’ equity
$3,370,000
It was determined at the date of the purchase that the fair value
of the identifiable net...
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common
stock of Dodo Corp. On that date, Dodo's equity included $1,000,000
capital stock and $1,600,000 of retained earnings. An appraisal of
Dodo's assets identified a patent that had a market value of
$140,000 and a life of 5 years that was unrecorded. Dodo's reported
earnings for 2020 totaled $512,000 and it paid $160,000 of
dividends during the year. The amortization of allocations related
to the investment was $28,000....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common
stock of Dodo Corp. On that date, Dodo's equity included $1,000,000
capital stock and $1,600,000 of retained earnings. An appraisal of
Dodo's assets identified a patent that had a market value of
$140,000 and a life of 5 years that was unrecorded. Dodo's reported
earnings for 2020 totaled $512,000 and it paid $160,000 of
dividends during the year. The amortization of allocations related
to the investment was $28,000....
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc.,...
On May 28, 2021, Pesky Corporation acquired all of the
outstanding common stock of Harman, Inc., for $510 million. The
fair value of Harman's identifiable tangible and intangible assets
totaled $575 million, and the fair value of liabilities assumed by
Pesky was $149 million. Pesky performed a goodwill impairment test
at the end of its fiscal year ended December 31, 2021. Management
has provided the following information: Fair value of Harman, Inc.
$ 490 million Fair value of Harman's net...
On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation...
On March 31, 2021, Wolfson Corporation acquired all of the
outstanding common stock of Barney Corporation for $17,100,000 in
cash. The book values and fair values of Barney’s assets and
liabilities were as follows:
Book Value
Fair Value
Current assets
$
6,100,000
$
7,600,000
Property, plant, and equipment
11,100,000
14,100,000
Other assets
1,010,000
1,510,000
Current liabilities
4,100,000
4,100,000
Long-term liabilities
6,100,000
5,600,000
Required:
Calculate the amount paid for goodwill.
On December 31, 2021, Oriole Company had 1,365,000 shares of $5 par common stock issued and...
On December 31, 2021, Oriole Company had 1,365,000 shares of $5
par common stock issued and outstanding. At December 31, 2021,
stockholders’ equity had the amounts listed here.
Common Stock
$6,825,000
Additional Paid-in Capital
1,845,000
Retained Earnings
1,105,000
Transactions during 2022 and other information related to
stockholders’ equity accounts were as follows.
1.
On January 10, issued at $114 per
share 112,000 shares of $101 par value, 7% cumulative preferred
stock.
2.
On February 8, reacquired 13,900
shares of its...
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